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Why Domino’s Reported the Highest 4Q15 Same-Store Sales Growth

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Mar. 9 2016, Updated 9:07 a.m. ET

Same-store sales growth

Same-store sales growth, expressed as a percentage, is a measure of the increase in revenue from existing restaurants over a certain period of time. Same-store sales growth is a key revenue growth driver, as it increases revenue without increasing capital expenditure.

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Comparing 4Q15 performance

The above chart clearly depicts that Domino’s Pizza (DPZ), which recorded approximate system-wide same-store sales growth of 9.6% year-over-year (or YoY), outpaced all other fast food and pizza companies in 4Q15. With the intention of enhancing customer experience, the company has adopted a re-imaging program, which is scheduled to run for another couple of years. The program has helped the company to increase its traffic and thus its same-store sales growth.

Sonic (SONC) and McDonald’s (MCD) followed DPZ. For MCD’s size, a 5% YoY rise in same-store sales growth was significant. The company’s implementation of all-day breakfast helped it to increase its average check size. Although MCD struggled with traffic, increased check size helped the company to boost its same-store sales growth.

Underperformers

The median same-store sales growth of the eight companies under review was 4.4% in 4Q15. Pizza Hut of YUM! Brands (YUM), Papa John’s (PZZA), Jack in the Box (JACK), and Restaurant Brands International (QSR) recorded lower growth than the median, with Pizza Hut’s same-store sales growth being the lowest at 1% YoY.

You can gain exposure to restaurant industry by investing in the SPDR S&P 500 ETF (SPY), which has invested 0.63% in McDonald’s (MCD).

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